Many financial institutions may shut anytime
Abu Sazzad: Most of the non-bank financial institutions (NBFIs) are facing profound uncertainty for ensuring the expected level of financial services mainly due to widespread financial irregularities and mismanagement since long that have completely broken the financial discipline of such category financial institutions.
Now, most of the Non-Bank Financial Institutions (NBFIs) are struggling to protect survival existence and anytime a good number of NBFIs may shut their operation, said banking sources.
Out of 33 NBFIs, some 11 NBFIs are in the red zone, followed by 18 in yellow zone and 4 in green zone, according to the latest stress test report of Bangladesh Bank released recently.
Among the companies in the red zone are People’s Leasing and Financial Services Limited, Bangladesh Finance and Investment Company , Bangladesh Industrial Finance Company , FAS Finance and Investment, Fareast Finance and Investment, Islamic Finance and Investment, International Leasing and Financial Services, Prime Finance and Investment, Premier Leasing and Finance and Reliance Finance. A senior Bangladesh Bank official said that earlier there were 10 companies in the red zone and this time another organization has been added.
Actually, Bangladesh Bank has categorized the institutions into different zones on the basis of stress testing reports including interest rate hike, debt risk, equity risk and liquidity, he explained. Bangladesh Bank has already started to conduct close monitoring in red zone holding financial institutions, he added.
However, economists expressed their deep concern for breaking the financial discipline which is hindering the steady growth of the country. Corruption, financial irregularities, mismanagement and the NPLs are the major reasons behind the squeezing the financial health of these FIs, they observed.
In the recent times, the banks are failing to supply adequate money to the NBFIs for applying go-slow policy concentrating the virus pandemic. In the recent time, most of the NBFIs are facing severe hardship to pay the depositors’ money mainly due to acute financial crisis. Many stakeholders expressed their dissatisfaction to the Daily Industry because of they are not getting the adequate financial assistance from the NBFIs.
Experts said, the financial sector is the nerve of the economy but such unhealthy FIs is posing threat for revamping the economic activities in the country.
Khandaker Ibrahim Khaled, former Deputy Governor of Bangladesh Bank said, it is very difficult to keep viable of these non-bank financial institutions at this stage.
He was not getting courage to bring the institution back to its normal situation. But if Bangladesh Bank takes any special scheme to save the institution then it might be possible, he also opined.
Experts questioned that as most of the NBFIs are facing deep trouble, it has become very difficult to tackle the matter by the Bangladesh Bank.
Dr AB Mirza Azizul Islam, former adviser to the caretaker government suggested for creating a congenial atmosphere for developing the bond market, which can help overcome the existing asset-liability mismatch in the financial sector.
Dr Salehuddin Ahmed said that the financial health of NBFIs is worse than banks. Such huge dependency on banks has landed the leasing companies into severe crisis, he said. He has underscored the need for ensuring financial discipline and good governance of the FIs to overcome such uncomfortable situation.
In this backdrop, the default loan of the NBFIs stood at Tk 8,905 crore as on June last which is almost 14 percent of the total credit.